Dems threatening lobbyists who back GOP with tax retribution

posted at 10:25 am on March 2, 2012 by Ed Morrissey

Democrats must be having a pretty bad fundraising season, on K Street as well as everywhere else. Normally, a party with a good shot at holding power would expect big-ticket donors to flock to their outside groups and drop lots of money in order to curry favor. This year, though, Democrats have abandoned a strategy of attracting donors in favor of threatening them, Politico reports:

Democrats on K Street are warning their corporate clients: Give to Republican challengers in the 2012 election, and you’ll regret it come tax reform time.

Lobbyists are getting that message from allies of powerful Democrats such as Senate Finance Chairman Max Baucus (D-Mont.), who is closely watching support for Rep. Denny Rehberg, a Republican challenging Sen. Jon Tester (D-Mont.). Baucus supporters fear that if Rehberg ousts Tester, Baucus could be next to face a serious Republican challenge in the state.

One K-Streeter close to the Baucus operation said the senator considers a gift to Rehberg a contribution against him. Another Democratic lobbyist told a client to take his name off a Rehberg fundraising event because it would be hurtful to his company, according to sources.

The case K-Streeters are making to their clients: It will be a hard sell next year to get Baucus’s support on business-friendly tax perks set to expire or the Bush-era tax cuts that must get through his committee.

Hmmm. Is that how policy gets made in the era of Hope and Change? Correct answer — of course! It’s pretty much how both parties fundraise off of K Street, by warning of the dire consequences of letting the other party take control of Congress and/or the White House. Normally that gets framed in the context of the opposition’s platform, not personal payback for picking the wrong side. This sounds a little more explicit than one would normally expect, but it’s really the same message, packaged in slightly different form.

However, this argument might be moot anyway. Jim Pethokoukis notes that the Bush tax rates would be a goner in a second Barack Obama term, with no subsequent election to leash his inner tax-hiker — and that Obama would let all of the Bush tax rates expire:

It would have been the Mother of All Tax Hikes, a $3 trillion tax increase during shaky economic times. It would have broken a campaign promise not to raise taxes on middle-income Americans.

And President Obama was shockingly close to embracing such a plan back in 2009. And if he’s reelected in 2012, Obama may well reconsider the idea and let all the Bush tax cuts expire as they are scheduled to do in 2013.

What is clear is that, having been tempted to end all of the Bush tax cuts in 2009, the president would only find the idea more attractive were he to win a second term. At that point, he will never again stand before the voters, at least not as a presidential candidate. There would be nothing to stop him from flouting a campaign promise, even one as sensitive as his tax pledge.

Perhaps most important of all, killing the entire zombie army of Bush tax breaks would be far, far easier than only slaying the upper-income portions. To pull off the former, Obama literally has to do nothing—the tax breaks are slated to expire on their own. To do the latter, he would have to pass legislation extending the middle-class elements. As a practical matter, that means rounding up majorities in the House and Senate, which seems unimaginable given the likely balance of power on Capitol Hill after the election. (There is a third option, which entails striking a deal with Republicans to junk the entire tax code and rebuild it from scratch, but it’s hard to envision this happening between Election Day and December 31.)

Seems to me that the real message to K Street — and everyone else — will be that the only way to avoid getting hammered with economy-killing tax hikes will be to replace as many Democrats as possible in the fall, starting at the White House and going all the way down to state legislatures. That way, Baucus won’t be running the committee any longer, and Obama won’t have the opportunity to pass the biggest tax hike in American history.